What happened this week: A generally quiet week has come to an end. Sales and interest have been one of the lowest for quite a long time. If there was any interest or activity it was – not too much surprising – in low quality hides. Buyers tried to bargain and had exaggerated hopes, but in view of the general market situation we finally accepted moderate declines of 2-3 % against our original asking levels. The interest for cheaper and more economical hides is in our opinion just the reflection of the price pressure along the supply chain and in some cases also related to good demand for cheaper sole leathers. All other buyers were put more on hold and only some normal program sales or coincidental sales were noted. In our case sales were exclusively made in Europe and we find Asian buyers pretty quiet now for some time. Those we were able to speak to reported mixed results from the fair in Highpoint, but in one thing all agreed:

Gerneral pressure on leather prices and consequently more interest for the - so called – economical leathers. For a country like Germany one also realise, that in the classical weekend advertisements for furniture, much less leather is on offer, while fabrics, microfibres and ‘leather-look-alike’ articles are dominating the mass market in the media publications. A classical result when leather prices have run out of their limits. A trend one can see also in the shoe market. Outdoor casual and children shoes show more leather substitutes than ever before and one should not be surprised to see this also returning to ladies fashion. However, having said this we feel that the situation in shoe leathers is presently better than the mood, accepting that there are still margin problems. However, most tanners we deal with, are busy and just struggling with calculations. A bit for the street gossip was the major French tannery has been imprisoned for accusations. How far this might influence the future of the company has to be seen.

The kill: Still very strong up in the North, while in the rest of the country numbers are steady on the higher levels. Weights are not anymore increasing. We have no reason to believe, that the present situation should change over the next weeks.

What do we expect? With the reduced activity and most tanners in Europe being reasonably well covered for the coming weeks, we have to assume, that the present downward pressure is going to persist, However, we fail to foresee any massive decline. Leather business is still good enough and only the higher kill has created the present price decline. However, we have to watch the signs, that leather might be more and more substituted by other products for price reasons. Also next week further moderate price concessions can be expected to generate sales. We think this trend will still continue for some more weeks.

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